The booming Indian renewable (RE) sector has been hit badly by COVID-19. As per GlobalData’s analysis, the RE sector in India contracted by over 50% in H1 2020 compared to the same period last year. During H1 2019, India saw over 104 financial deals in the RE technologies as compared to just over 50 during H1’2020
June 25, 2020. By News Bureau
COVID-19 has impacted the market to such an extent that the market conditions seem gloomy and uncertain in the near future. Hence, investors are expected to be very selective about investing in renewable energy projects ascertaining the developer’s ability and strength, and the cost of debt procurement. This can prove to be a challenge in securing debt capital in the near term, says GlobalData.
The distribution companies (DISCOMS) are focusing on maintaining the liquidity. Delays in payments have impacted their immediate working capital. The under-construction renewable energy projects bear the chance of seeing delayed financial closures. This calls out for structural reforms in the electricity sector without which the financial condition of the distribution companies would deteriorate.
The booming Indian renewable (RE) sector has been hit badly by COVID-19. As per GlobalData’s analysis, the RE sector in India contracted by over 50% in H1 2020 compared to the same period last year. During H1 2019, India saw over 104 financial deals in the RE technologies as compared to just over 50 during H1’2020.
Somik Das, Senior Power Analyst at GlobalData, comments: “With the pandemic in place and the number of rising bad loans in the power sector, public sector banks are opting for a more risk-averse approach where they are particularly lending to more promising projects. The non-banking financial companies (NBFCs), which are more active in this space, are trying to maintain their liquidity and in turn, would likely be less active in lending for RE projects.
“Even with the fragile current investment landscape, the government is making the necessary arrangements to smoothen the funding flow by proposing to remove the limit under priority sector lending to the RE projects, lowering the tariffs and associated costs. These green shoots have been received positively by the industry and help the developers secure larger loans on time. It is expected that this year India will add around 16GW of renewable capacity due to a strong development pipeline, government support and presence of serious developers to disseminate the growth seeds.”
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